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MUMBAI, Oct. 3

THE already evident intense competition in the textile market is expected to intensify further in the coming couple of years with the imminent phasing out of quotas on textiles and apparel by January 1, 2005.

A quota-free world will mean lower priced garment and it is expected that half of the 150,000 existing export factories worldwide will almost certainly fail, as the other half has the capacity to meet all the demand, the International Cotton Advisory Committee (ICAC) has forecast.

On demand prospects, the agency said as the pace of world economy mainly depends on the health of the US and European economies, it remains to be seen, given the prevalent economic uncertainty, whether the increased output of yarn will result in accumulating stocks or will actually translate into retail sales of finished goods to consumers.

By July 31, 2003 world cotton stocks are expected to decline to a 7-year low of 9.1 million tonnes, down 1.4 mt from same time previous year, following an increase in world consumption to 20.7 mt, but production trailing at 19.3 mt.

International cotton prices are projected to remain below the long-term average for the fifth consecutive season in 2002-03, and again in 2003-04, ICAC said.

Supply and demand estimates suggest that the Cotlook A-Index, a measure of international cotton prices, will average 53 cents per pound this season, 11 cents or 27 per cent higher than last season, which was the lowest since 1971-72.

Due to a further reduction in ending stocks in 2003-04 combined with an anticipated increase in China's imports, the Cotlook A-Index is projected to reach 57 cents per pound in 2003-04.

World cotton area is seen declining by 7 per cent to an estimated 31.2 million hectares in 2002-03, the lowest since 1993-94, ICAC said, adding that the world average yield is expected to decline from an all-time high of 640 kg per hectare in 2001-02 to 619 kg/ha, the second highest on record.

As a result, world production is expected to fall by 2.2 mt from a record of 21.5 mt last season.

While low prices boosted world cotton mill consumption in 2001-02, which increased 1.9 per cent to a record of 20.1 mt, thanks to the booming textile industry in China, world mill consumption is expected to increase by 600,000 tonnes or 2.8 per cent to 20.7 mt in 2002-03.

Although the growth rate is projected to decrease to 1.4 per cent in 2003-04, world consumption is projected to reach 21 mt.

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